Since June of last year, the dollar charged higher after the Fed announced quantitative easing would end and rates would be increasing. The dollar topped out in November 2021 and again last month. FX markets see the pandemic easing, global economies growing and central bank activity fully priced in, leaving geopolitical risk as the primary driver of any short-term dollar strength.
The Chinese authorities fixed the daily renminbi setting significantly weaker giving back all of last week’s gains.
Economic Data this Week:
Tuesday: US Trade Balance data for December
Wednesday: Wholesale Inventories for December
Thursday: CPI for January, Initial Jobless Claims
Friday: University of Michigan Consumer Sentiment for February
February 7, 2022
EUR/USD 1.1434 GBP/USD 1.3515 USD/CAD 1.2714 AUD/USD 0.7116 USD/JPY 115.08 USD/CNH 6.3671 USD/ILS 3.1886 USD/MXN 20.6213 USD/CHF 0.9239 USD/INR 74.6900 USD/BRL 5.2952 USD/SGD 1.3443 USD/DKK 6.5122 USD/SEK 9.1453 USD/NOK 8.8017
The dollar gave back some of last week's gains to start the week. The FOMC meeting from two weeks ago and the stronger than expected employment data last Friday provided a boost to the dollar. Those gains, however, have now been completely given back.GBP
The pound continued to lose ground to the US dollar after the Bank of England, last week, raised rates 25bps disappointing some who thought a 50bps increase was possible. With this Thursday’s CPI data release some FX speculators believe a high reading will lead to a 50bps increase by the Fed when it meets next month.EUR
The euro began the week with a slight sell-off. The common currency gave back some of last week’s gains that occurred due to the European Central Bank signaling a willingness to raise rates in 2022. FX traders sited technical indications as a reason to sell euros.CAD
CAD weakened following the price of oil lower. The price of oil has risen 75% since the start of 2021 and now trades at the highest level since 2014. The price of West Texas Intermediate is down in morning trading despite some capacity in the US coming off-line due to a major winter storm over the weekend.ASIA/PACIFIC
The Chinese authorities fixed the daily renminbi setting significantly weaker giving back all of last week’s Lunar New year holiday gains.
The Australian dollar gained on overall USD weakness and news that some travel restrictions related to the pandemic would be lifted to allow international travelers into Australia. Western Australia remains closed to the rest of the country.
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